HP Can Grab More A3 Market Share

The following appears on barrons.com

By Wells Fargo Securities ($18.82, May 31, 2017)

We reiterate our Outperform rating on HP.

On April 5, HP (ticker: HPQ) shipped more than 54 SKUs of new A3 multifunction printers to more than 80 countries world-wide. The company signed and on-boarded more than 500 resellers world-wide for the A3 opportunity with roughly 40% new to HP.

We think the latter reflects the potential value proposition to the channel and believe the product portfolio should further strengthen following the close of Samsung acquisition (expected to close before September).

According to Gartner, HP had only 3.7% share of the $25.3 billion hardware market in 2016 (while the total market opportunity including supplies, services, etc., is $55 billion). We believe HP’s portfolio breadth, channel expansion, and value proposition position it well to gain share over time and also see potential for industry consolidation with more than 40% of the market held by 18 vendors outside of the top three. We estimate every one point of market share can translate into two cents of earnings per share, all else equal, and believe the A3 opportunity is not fully understood or embedded into estimates.